State sues mortgage lenders alleging misrepresentation

A Colorado Springs mortgage company and two of its officials have been sued by the Colorado Attorney General’s office for misrepresenting the interest rates, monthly payments and other terms of loans they made, many of which ended up in foreclosure.
The lawsuit, filed Oct. 8 in Fremont County...

A Colorado Springs mortgage company and two of its officials have been sued by the Colorado Attorney General’s office for misrepresenting the interest rates, monthly payments and other terms of loans they made, many of which ended up in foreclosure.

The lawsuit, filed Oct. 8 in Fremont County District Court, alleges that 84 of the 192 loans made by April Bigler, the top loan originator for Alternative Lending of Colorado, between 2004 and 2008 in El Paso, Fremont and Pueblo counties ended up in foreclosure because she led borrowers to believe they were taking out a fixed-rate loan and instead found later they had gotten two variable-rate loans with much higher interest rates and monthly payments than they expected.

Bigler, 29, of Pueblo West, also failed to tell borrowers that their loan payments didn’t include property tax and insurance costs, repeatedly delayed closings to leave borrowers with few alternatives to the loans she arranged, inflated borrowers’ incomes on loan applications and worked with appraisers to inflate the value of homes being mortgaged, the lawsuit alleges. As a result, borrowers ended up with loans they could not afford, according to the lawsuit.

Although Bigler allegedly made hundreds of loans during the four-year period, the Attorney General’s office has information about only the 192 loans, the lawsuit said. Most of the loans were made on homes in Fremont County, although some were in the Springs and Pueblo, it said.

The lawsuit also names James W. Dale III, 64, also of Pueblo West and who is managing general partner of Alternative Lending of Colorado, as a defendant for failing to enforce the company’s policies or discipline Bigler for violating them. The civil lawsuit charges Bigler with 15 violations of Colorado consumer protection laws, Dale with nine such violations and the company with four violations, and seeks fines of up to $10,000 per violation and restitution to all victims of the alleged scheme.

Neither Bigler or Dale responded Tuesday to a telephone call to Alternative Lending of Colorado’s office seeking comment. They have not filed a formal answer to the lawsuit.

The Colorado Board of Real Estate Appraisers also has revoked the license of one appraiser, put another on probation for 2½ years and fined another $500 in connection with their work for Bigler, according to a news release issued by the Attorney General’s office. The Colorado Real Estate Division also is seeking to revoke Bigler’s license and fine her $16,000.

The Attorney General’s office said it began investigating Bigler and Alternative Lending of Colorado after receiving more than 15 complaints from borrowers about alleged deceptive lending practices.